KKR’s $15bn haul kicks off big year for Asia fundraising

KKR has amassed $15 billion for the largest private equity fund dedicated to the Asia-Pacific region.

The New York-based firm surpassed its target size to reach its hard-cap for KKR Asian Fund IV, according to a statement. It had an initial target of $12.5 billion for the vehicle, as previously reported.

Limited partners include the California Public Employees’ Retirement System and California State Teachers’ Retirement System – which committed $300 million each – Minnesota State Board of Investment and Taiwan’s Cathay Life Insurance, according to PEI data.

Asian Fund IV garnered commitments from close to 290 LPs, the most for a single KKR vehicle, according to a spokeswoman for the firm. More than 80 committed capital to a KKR PE fund for the first time. Meanwhile, 83 percent of capital commitments in the fund came from Asian Fund III investors, she added.

KKR’s GP commitment is approximately $1.3 billion, according to the statement.

Fund IV is more than 60 percent larger than its 2017-vintage predecessor.

The opportunity for PE investment across the region is “phenomenal”, said Hiro Hirano, co-head of Asia Pacific private equity at KKR, in the statement. “While each market is unique, the long-term fundamentals underpinning the region’s growth are consistent – the demand for consumption upgrades, a fast-growing middle class, rising urbanisation and technological disruption,” Hirano said.

Similar to prior funds, Asian Fund IV will back corporate carve-outs, spin-offs and consolidation. Capital raised for the vehicle has made five investments so far, including in Indian telecom network Reliance Jio, Reliance Retail, Japanese retailer Seiyu and South Korean marine services provider Hyundai Global Services.

KKR believes its Asia franchise could become as large as North America. Of all the “significant growth opportunities” the firm has ahead, “maybe our biggest is in Asia”, chief financial officer Rob Lewin said on an earnings call last August.

The firm brought in $17 billion for its Asia strategies last year, representing almost 40 percent of fresh capital raised, according to its fourth quarter 2020 results. KKR raised $5.6 billion in the fourth quarter of last year for its inaugural pan-regional infrastructure and real estate funds. It has over $30 billion in assets in the region across private equity, infrastructure, real estate and credit.

Private equity funds focused on Asia were targeting $121.1 billion as of mid-January, roughly 50 percent more than funds targeting Europe, according to PEI’s 2020 fundraising report. Hillhouse Capital is seeking up to $13 billion for its fifth Asia fund, affiliate publication Buyouts reported in March last year.

Appetite for the region has been driven by more attractive valuations, higher growth rates and more favourable risk profiles compared with the US and Europe, according to Adams Street Partners’ Trends in Asia Co-investments report. Asia was the top geographic focus for LPs, with more than 40 percent of respondents saying the region offered the best private market opportunities in 2021.